APEI TODAY

APEI encompasses the American Public University System (APUS) and Hondros College of Nursing.

In 2016, Hondros made great progress in attracting new students while enhancing the quality of its programs and strengthening its overall student population. In fact, new student enrollment for the 2017 winter term increased 22 percent compared to prior year. Today, Hondros serves more than 1,700 students on five Ohio campuses; the college opened its fifth campus in suburban Toledo in January 2017. With a growing reputation and 5,600 alumni, Hondros has partnered with several clinical networks, and built close relationships with more than thirty community healthcare organizations to provide staffing solutions and education benefits to their employees. I am proud of the progress the college made over the past year. However, we still have work to do.  For example, Hondros is pursuing initial accreditation by the Accrediting Bureau of Higher Education Schools (ABHES), a national accreditor for allied health schools, a significant step for us.

Today, APUS continues to earn recognition for quality and innovation. At the start of 2017, APUS was awarded its fifth Effective Practice Award from the Online Learning Consortium, an unprecedented achievement. In addition, in 2017, APUS received the “Best for Vets Colleges” distinction from Military Times for the third consecutive year and U.S. News and World Report ranked APUS bachelor's programs among the best nationally for the fifth consecutive year in its 2017 ranking of online institutions.

Originally founded in 1991 to provide affordable education to a mobile military, APUS today has grown to serve a diverse array of students and offer a full complement of programs including 200 degree and certificate programs. I am pleased to report that APUS conferred degrees upon 11,000 hard-working students in 2016. These graduates joined the ranks of more than 70,000 AMU and APU alumni worldwide. That is the true measure of our success.

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Quality and affordability have always been fundamental hallmarks of an APUS education. We believe the cost of tuition, books and fees at APUS remains significantly below in-state costs at four-year institutions. We keep costs down through our efficient online approach and programs such as our Undergraduate Book Grant, which provides textbooks and course materials at no cost to our undergraduate students. This focus on affordability provides immeasurable benefits to the families and communities we serve.

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Our unwavering focus on quality has helped advance APUS’ reputation throughout the higher education community. The distinguished faculty of APUS consists of scholar practitioners, leaders in their respective disciplines who bring a real-world experience to the classroom. They reported publishing more than 400 articles, papers or books; earning approximately 50 awards for professional practice, research and community service; and presenting at more than 500 conferences, workshops and panels in 2016.

APUS is a community of teachers and learners committed to excellence. We take great pride in the fact that, in 2016, four APUS students were named finalists in the Presidential Management Fellows (PMF) program. Overall, since 2012, APUS has had 38 PMF finalists. PMF receives 8,000 applications for its program each year, making it one of the most prestigious and competitive government opportunities in leadership development.

A pioneer in online higher education, APUS offers a compelling learning environment — small class sizes, flexibility, an engaging curriculum and a high level of faculty support. The curriculum includes specialized programs such as cybersecurity, emergency & disaster management, and transportation logistics that attract highly motivated students — as well as classes such as Asymmetric Warfare, Space Studies, and Explosive Ordinance Disposal that might be hard to find elsewhere. Consistently high levels of student satisfaction and alumni referrals are a testament to the quality and relevance of our programs and levels of student engagement.

COLLEGE READINESS AND PERSISTENCE

In recent years, we have increased our emphasis on improving retention and attracting more college-ready students to the university. As part of this effort, APUS implemented changes to the enrollment process and introduced assessments for new applicants. In addition, each year we add new programs and enhancements aimed at attracting students and increasing engagement, including rich media, simulations and other enhancements.

At the same time, we have instituted a number of initiatives and innovations to drive even greater student persistence and success. For example, we introduced a Learning Relationship Management (LRM) system that supports student engagement and mentorship. In addition, we recently added a predictive analytics tool that helps faculty and advisors identify and engage at-risk students so they can provide those students with additional resources and support.

In 2016, for the third year in a row, we saw improvement in student persistence. For the three months ended December 31, 2016, the first-course pass and completion rate for APUS undergraduate students using Federal Student Aid increased by 19% compared to the same period last year. We believe this continued improvement in persistence may be an indicator that our efforts to attract and retain students with greater college readiness are having an impact.

BUILDING OUR WORKFORCE DEVELOPMENT CAPABILITIES

Today, U.S. employers are experiencing a substantial skills gap. They report increased difficulty filling certain types of jobs with qualified candidates, as well as a growing need for skills development in certain fields. As an example, in a 2015 study by the Association for Talent Development (ATD), 84% of those surveyed across a variety of industries reported a skills gap in their organizations. Given our history of building partnerships with corporations and organizations, we believe APUS is well positioned to bridge the skills gap through workforce development programs that address the specific needs of today’s employers.

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We’re moving forward with this strategic objective on a number of fronts. We continue to expand our program offerings in areas where demand is growing and where corporations struggle to find talent to fill job openings. In 2016, we launched seven new degree programs in business analytics, technical management and accounting — areas where our corporate partners tell us they can find good people but many of them lack specific skills.

We also continue to add new corporate and strategic partners. In 2016, new partnerships included Holland America Group, the U.S. Postal Service and National Public Employees Alliance, the only national affinity group dedicated to the public service sector.

In addition, APUS recently launched MomentumTM, an initiative to provide competency-based degree programs that address the skills gap in specific fields. We believe this program is one way to help our partners advance their workforce and to help students advance their careers. Through our Momentum program, participating students who possess work experience in specific fields can potentially test out of certain courses and further benefit from personalized learning content and guidance from faculty mentors.

Going forward, we are interested in partnering with, investing in and potentially acquiring businesses that will help us address the growing demand for workforce development. In an environment where more and more traditional universities are getting into the field of online education, we belief this strategy will open up new opportunities.

APEI is well positioned to pursue such investments. For the twelve months ending December 31, 2016, cash and cash equivalents increased to $146.4 million despite a decline in total revenues and net income. That represents an increase of $40.7 million over the prior year. Total assets increased to $313.7 million. That cash reserve gives us the financial strength to explore investments in nursing and healthcare education, as well as other education and training opportunities.

2016 APPOINTMENTS

In July, Dr. Karan Powell was named president of APUS. Dr. Powell has more than 30 years of experience in higher education and online learning, including leadership development and organizational transformation within business, government and non-profit sectors. Prior to her appointment, she had served as Provost of APUS since 2011 and has held several other senior academic leadership roles within the university. Dr. Powell is committed to expanding APUS’s reputation as a premier provider of higher education and as a partner in fostering the success of its students.

In 2016, we made a number of other key appointments to support our strategic objectives. We named a new Provost, who will focus on learning outcomes assessments, new program and faculty development, as well as curriculum innovation and advancement. Improving retention and developing new programs will be at the forefront of his agenda.

Our top priority in 2017 is stabilizing student enrollment at APUS. To help lead the advancement of our enrollment efforts, we recently appointed a new SVP and Chief Operations Officer with a strong background in enrollment management. This new position has responsibility for re-engineering our enrollment management processes to improve conversion rates of incoming students as well as the onboarding experience. Within APEI, we appointed a new chief innovation officer. She will play a central role in advancing our long-term strategy of investing in healthcare education and education companies aimed at bridging the skills gap and serving our nation’s workforce development needs.

IN CLOSING

APEI has a 25-year history of innovation as a provider of higher education in the digital space. During that period, our world has changed dramatically. Today, technology is how people connect, how they find jobs, how they do their work, how they communicate. Based on a 2015 study, fully 87% of college students use a laptop to do school work and 78% of elementary school students regularly use a tablet.1 The current generation of elementary school students are digital natives. In today’s world, technology has become an indispensable element of education at every level.

Over time, this change has drawn more institutions into the field of online higher education. The competition for college-ready students has increased. Nonetheless, APUS has built a reputation based on certain fundamental strengths that set us apart—including highly specialized programs, experience with best practices in online learning, and an understanding of how to engage students and build supportive relationships in an online setting. We believe our affordability and quality is a key differentiator, as is our commitment to the nursing, public service and military communities we serve.

As we approach our tenth anniversary as a public company on November 17, we have built an excellent platform not only for continued leadership in providing higher education for adult learners, but also for addressing the growing need for healthcare education and workforce development. We look forward to an exciting future and to serving our students with distinction.

Truly yours,

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1. Pearson Student Mobile Device Survey, 2015